Billionaire Hedge Funder John Paulson Joins Valeant Board (VRX)

In spite of a bad bet on Valeant Pharmaceuticals (VRX) which cost his firm almost $2 billion, John Paulson has joined the board of the pharmaceuticals company. Paulson, the billionaire and leader of the hedge fund Paulson & Co., became a director of the board on June 14, 2017, according to a company announcement released today. The move comes at a time when Paulson and his hedge fund have recorded almost double-digit losses for several funds through the end of the first quarter.

Paulson indicated his strong support of the pharmaceuticals company, in spite of his own personal losses as a result of his bets on the firm. "The strategic plan to transform Valeant smartly focuses on rebuilding the company's core franchises in ophthalmology, dermatology and gastroenterology while simultaneously using the proceeds from the sale of non-core assets and operating cash flow to de-lever the company. I am fully supportive of the strategy and leadership team at Valeant."

Paulson Joins 10 Other Members

With the addition of Paulson to the board, Valeant has a total of 11 different individuals serving as directors, all but one of whom are independent. Valeant remains a multinational pharmaceutical company which develops, manufactures, and sells a wide array of pharmaceutical products. Immediately after the announcement of Paulson's membership on the company's board of directors, VRX stock climbed by 3.5%.

Paulson's involvement with Valeant may be seen by some in the investment world as a reassuring sign of the strength of the company, particularly after longtime supporter Bill Ackman of Pershing Square backed out of his investment earlier in the year. With Ackman's exit in March, Paulson & Co. became the company with the largest holding of VRX. As of the end of March, Paulson held 5.7% of all VRX stock. The price of Valeant has recovered somewhat from a low period in recent months, possibly linked to Papa's decision to raise the company's outlook and sell off a few assets in the past several months as a way of addressing the firm's debt. Nonetheless, Valeant's stock price is hovering around 80% below its peak in 2015. In the intervening time, the company has been embroiled in scandals related to its accounting practices and its drug pricing. Ackman, who had been a staunch supporter during those troubled times, eventually admitted that he felt his investment had been a "huge mistake," according to Bloomberg.